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US Dollar Edges Higher after Mixed US Data

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US Dollar Edges Higher after Mixed US Data

The US dollar edged higher Monday, as negative European data overshadowed disappointing US releases.

The US dollar index, a weighted average of the greenback’s performance versus six major currencies, advanced 0.24 percent to 80.56. The index has advanced more than 0.4 percent since investors returned from the Memorial Day long weekend.

The dollar was supported against its European rivals after the Eurozone and UK posted disappointing economic figures.

The Eurozone manufacturing industry declined sharply in May, as France fell back into recession and growth eased in Germany, Italy, Austria and Greece. Markit Group’s gauge of Eurozone manufacturing activity declined from 53.4 to 52.2 in May.

Germany’s manufacturing PMI eased from 54.1 to 52.3, a seven-month low, as output and new orders expanded at slower rates.

Separately, German inflation eased to a four-year low in May, raising expectations the European Central Bank will implement additional easing measures to stimulate price growth at this week’s policy meeting.

German consumer prices, calculated using a method harmonized by the European Union, declined 0.3 percent in May, following a similar decline the previous month. Year-on-year, German consumer inflation eased from 1.1 percent to 0.6 percent, official data showed. Economists forecast an annualized rate of 1 percent.

The EURUSD declined 0.22 percent to 1.3604, consolidating from an intraday low of 1.3594. The pair is currently testing initial support. It faces initial resistance at 1.3657.

The dollar edged higher versus the British pound after the Bank of England reported declines in mortgage approvals, consumer credit and net lending to individuals.

In a separate report, Markit Group said the UK construction sector remained firm in May, despite a slight drop in the headline PMI reading.

The GBPUSD was trading at 1.6754, declining 0.07 percent. The pair sunk to an intraday low of 1.6728. Initial support is likely found at 1.6720 and resistance at 1.6785.

The USDJPY was well supported Monday, advancing nearly half a percent to 102.33. The pair stumbled briefly after the Institute for Supply Management said the US manufacturing sector expanded at a slower rate in May. The pair faces initial support at 101.53 and is currently testing initial resistance at 102.31.

In other US data, construction spending increased slower than forecast in April, underscoring concern housing activity experienced only a mild pick-up after a weak first quarter. Construction spending increased 0.2 percent in April, one-third the rate of the previous month, the Commerce Department reported today in Washington. However, overall spending in April was the highest in five-years at $953.5 billion annually.

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